Chris:
Lots of good advice on the board so far. The number one thing you need to do (of course) is look out for your family. Sadly, this may entail simply moving away. However, there are other remedies short of that, if you are up for it.
First and foremost, create a file and document, document, document. Start with the posts you've written here and write them out. Have each of your family members write down incidents with dates and times to the best they can remember. Then add to the file with photographs, videos and anything else you can catch on tape. Be discreet. It may be worthwhile to purchase a mini tape recorder so you can record any verbal abuse hurled at you. Something that doesn't appear to be mentioned yet here - are there other neighbors that can vouch for you? This can be anything from generally what a good, upstanding neighbor you are, all the way to direct witnesses of harrassment they may have seen. Have them write it down in a statement. This can be especially helpful to prevent the he-said/he-said nature of the harrassment. Also make sure to record each time you've called the state troopers and their response.
Second, involve federal authorities. The FBI is a great way to start. Call the local office or better yet, go there and speak with them about what's going on. Bring your file. Show them what's going on. If you have a neighbor witness, show them the neighbor's written statement. Hate crimes are federal, but you need proof other that simply complaining to them. The file is key here. Give names of the troopers and the badge numbers of those that have come out to investigate. Let the FBI know that nothing was done.
Third, consult with a lawyer. This is the one of those times that lawyers really do earn their fees. Show your attorney the file. Ask about getting a TRO (temporary restraining order) issued against the neighbor. Courts generally will do so with sufficient evidence (i.e., your file). The standard for TRO's is generally fairly low and if the neighbor really is not doing anything wrong, the TRO is no big deal (i.e., generally it will contain restrictions on contact with you or your family). It helps because it orders a stop to the harrassment immediately and the threshold of proof for getting one should be easy to meet. Once the TRO is in place, any contact or harrassment from your neighbor becomes a crime. Also ask the lawyer about filing a civil lawsuit for harrassment. This ups the ante and may infuriate the neighbor, so make sure to follow the earlier steps first and get the TRO!! This can be turned into a full restraining order at a later date.
Chris - no one should have to go through with this. The ultimate option is, of course, to simply move away. Yes, the neighbors have won on the short term, but you and your family win in the end. Feel free to come down my way. Northern Virginia neighborhoods are full of FRIENDLY people. I say this as an Asian-American living next door to a French couple on one side and an African-American/Caucasion mixed-race couple on the other, with a Hispanic family next to them, a Middle Eastern family across the street from us and an African American family down the street.
Feel free to e-mail me direct if you have any questions or need to talk further.
JC